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YOUR MONEY

Malaysian Airlines May Face Lawsuits in Wake of Missing Plane Tragedy; General Motors Criticized for Recall; Larry Summers Speaks on U.S. Economy; Rahm Emanuel Working on Increasing Education Hours in Chicago

Aired April 5, 2014 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, CNN ANCHOR: Jobs. Where they are, and how to create them.

I'm Christine Romans. This is YOUR MONEY. In a few minutes, my conversations with Chicago Mayor Rahm Emanuel and former Treasury Secretary Larry Summers.

But first, a different question, what is a life worth? It's a dark and uncomfortable thing to ask, but it's a question that companies and courts sometimes have to answer.

(BEGIN VIDEOTAPE)

ROMANS: Grieving families who blame a GM defect for the death of their loved ones demanding justice.

UNIDENTIFIED FEMALE: I closed my eyes and think about how many died and that's not fair.

CHRISTINE ROMANS, CNN HOST: Another tragedy half a world away. Tales of Malaysia Airlines passengers desperate for news of what happened.

UNIDENTIFIED MALE: No evidence that they flight was crashed.

ROMANS: And soon both companies could be forced to pay up. General Motors admits it knew 10 years ago it knew something was wrong with a faulty ignition switch tied to 13 deaths and 31 accidents.

UNIDENTIFIED FEMALE: To everyone who has been affected by this recall, I am deeply sorry.

ROMANS: Terms of its bankruptcy could shield them from civil liability. The company just put Kenneth Feinberg on its payroll. He's the attorney who handled compensation for victims of the 9/11 terrorist attacks and the BP oil spill.

SEN. RICHARD BLUMENTHAL, (D) CONNECTICUT: Why not just come clean and say we're going to do justice, we're going to do the right thing.

UNIDENTIFIED FEMALE: Our first step in evaluating this is to hire Mr. Feinberg.

ROMANS: Malaysia Airlines has already paid $5,000 to the families of each passenger and that's the beginning. International law demands payment of $150,000 to $175,000 each, and relatives can sue on top of that. The first legal action already thrown out, but it won't be the last.

AHMAD JOUHARI YAHYA, CEO, MALAYSIA AIRLINES: We have to know what suits up before we respond.

ROMANS: Raising the difficult question, what is a life worth?

(END VIDEOTAPE)

ROMANS: Jeffrey Toobin is CNN legal analyst and former federal prosecutor. And Jeff, obviously General Motors and Malaysia are two very different stories, very different circumstances. No amount of money can ever bring somebody back, but when it comes to the law what is a life worth? You how do you value a life?

JEFFREY TOOBIN, CNN LEGAL ANALYST: The sad truth is the legal system has a lot of experience with this question because in every personal injury case where a death has been caused, whether it's a car accident or an industrial accident of some kind, the question arises, is what was a life worth? And Ken Feinberg, who was just hired by GM, probably has more experience on this question than anyone in the world, because he was in charge of dividing up the money for the victims of the World Trade Center attacks.

And the first question that's always asked is what was the person making in terms of income at the time of their death, and how can you project forward what they were --

ROMANS: Career earnings.

TOOBIN: So that's where you start. But it can get very complicated. After that, you have issues of pain and suffering. You have issues of how much does it take to support their family? But career earnings is certainly the first question you ask.

ROMANS: Let's talk about the GM case, because GM could be shielded from civil liability because GM went bankrupt. This is a new GM. There's a new company that holds all of the, I don't know, the junk of the old GM, and that's where the liability would lie.

Unless the bankruptcy judge is convinced that GM deliberately defrauded the court, there is also a criminal probe. And then you have Michael Moore calling for the death penalty for GM execs who knew about this. "I'm opposed to the death penalty, but to every rule there's usually an exception, and in this case I hope the criminals of General Motors will be arrested and made to pay." So how will this end for GM?

TOOBIN: There is a criminal investigation underway, but there's a weird area of law in terms of criminal investigations of companies, because companies can't be put in prison. Companies can only be fined and only be barred from federal contracts.

ROMANS: We've seen businesses put out of business. TOOBIN: Arthur Andersen being a prime example. But unless you can find a human being who committed a crime, criminal cases tend to disappear in the civil cases because, after all, it's just money and no one goes to prison.

ROMANS: Malaysia Airlines, we're still looking for the plane. If this plane is never found, can the victims' family get more than allowed under international law? Under international law they're allowed I think $175,000.

TOOBIN: From the airline.

ROMANS: From the airline.

TOOBIN: They can try, but it will certainly be difficult. Remember how complex the situation is. You have Malaysian Airline, mostly Chinese victims, an American-made plane, insurers from around the world, a plane that apparently disappeared somewhere in the Indian Ocean, maybe near Australia. You have so many different jurisdictions involved, they can try, but unless you can prove fault, some defect, whether it was a mistake by the airline or some problem with the Boeing plane, it's going to be very hard to get a lot more than the $175,000, under the Montreal Convention, which is the international law you were referring to.

ROMANS: There are thorny issues but bringing sort of this valuing a life, very difficult, and's sadly we have to even talk about it.

TOOBIN: Yes it is.

ROMANS: Jeff Toobin, thank you.

General Motors is not the only major U.S. automaker making news this weekend. Give me 60 seconds on the clock. It's "Money Time."

(BEGIN VIDEOTAPE)

ROMANS: Chrysler is recalling 870,000 SUVs worldwide. The problem, brake pedals that are too hard to press. The recall effects Jeep Grand Cherokees and Dodge Durangos from 2011 to 2014.

Amazon is on fire. The company unveiled its fire TV, a $99 box that connects your TV to internet programming like Netflix, Hulu, and, yes, Amazon Prime. It joins competitors like Apple TV.

Want to invest like Warren Buffett, George Soros, and Carl Icahn? There's an app for that. The iBillionaire app tracks the stock holdings of famous investors. And now pending SEC approval, the company is launching a fund investors can buy based on the billionaires' stock picks.

Baseball is here -- and so are higher prices at the ballpark. Average ticket prices rose by two percent to about $28 each. Red Sox fans will pay the most. Fenway Park has the highest ticket prices and the most expensive beer. And Red Sox slugger David Ortiz took a selfie with President Obama on his Samsung phone. Now that picture is showing up in Samsung tweets, part of a deal with Big Papi. It follows another famous Samsung selfie taken at the Oscars by Ellen Degeneres.

(END VIDEOTAPE)

ROMANS: By the way, the White House slamming Big Papi's stunt. It says the president's image should not be used for commercial purposes. The lawyers are now involved in that one.

The CEO of a major web browsing company is out after he supported efforts to ban same-sex marriage in California. Intolerance in tech- land, but which side is being intolerant?

(COMMERCIAL BREAK)

ROMANS: The CEO of web browser company Mozilla is out. Just 10 days after taking that job, Brendan Eich resigned. Why? Turns out he donated $1,000 to California's Prop 8 campaign, a campaign designed to outlaw same-sex marriage in California. Outrage was swift from employees, the gay community and Firefox users. Eich says he's committed to working with the LGBT community, but in the end resigned.

I want CNN's senior legal analyst Jeff Toobin to weigh in on this. This is a case of someone with personal view, put his money behind it several years ago, and now after being hired has to be, has to leave his job because there was so much outrage.

TOOBIN: You know, the real question here is, are we in a new world where companies and their CEOs have political profiles that customers respond favorably or negatively too? Historically that hasn't really been the case. There have been some companies that sort of have a political -- Amazon is for pro-gay rights, Starbucks, Howard Schultz has taken stands against guns in his store. Hobby Lobby, conservative, Chick-Fil-a, conservative. But the idea of a CEO losing his job I frankly find pretty troubling.

ROMANS: For something he did several years ago. He said he'd work with the LGBT community. So many of these tech companies have this very inclusive, tolerance brand, an image, that almost they're intolerant of intolerance.

TOOBIN: That's right, and it's worth remembering the position that he held on same-sex marriage was the position that Barack Obama held until about a year ago.

ROMANS: True. A large majority of Americans -- not a majority, but a --

TOOBIN: A plurality, in the 40s somewhere.

ROMANS: There you go.

TOOBIN: So the idea, it's not like he held Nazi views or some sort of way out there views. These are views held by millions and millions of Americans. And so the idea that that could get you fired is interesting. And also I think the gay community -- this wasn't an organized campaign to get rid of him. This arose largely because, OK Cupid, a dating site, started urging its users not to use Mozilla.

ROMANS: To use a different browser.

TOOBIN: I'm sorry, use a different browser.

ROMANS: Right.

TOOBIN: But the gay community I think reacted very cautiously to this and I'm not sure they want to get into this kind of contest with CEOs, because --

ROMANS: It's so interesting, because the pendulum shifted so much. Public perception of gay rights and gay marriage in particular has changed so much over the past 10 years even that it's almost as if his personal views didn't reflect from Silicon Valley, what tech-land thinks it should, and he was punished.

TOOBIN: And that's not been the rule previously. People have been allowed to hold all sorts of political views about drugs, about the death penalty, about taxes, about immigration. The idea you could lose your job because of that, I think people are going to think twice about whether we want to establish that kind of rule.

ROMANS: I wonder if anyone calling for his ouster would like their backgrounds scrutinized with their current employer to see if --

TOOBIN: Not me.

ROMANS: And not me. Jeff Toobin, thanks.

The need to create good jobs, Treasury Secretary Larry Summers talking about why President Obama needs to do more. Plus, I'll sit down with Chicago Mayor Rahm Emanuel to find out how he plans to engineer a comeback in the windy city.

But first, 81 million jobs pay less than $20 an hour. How does yours stack up? We break it down, next.

(COMMERCIAL BREAK)

ROMANS: The most important driver of "YOUR MONEY," your job. We've got a better picture of the jobs market today. We know there were 192,000 created in March. We know the jobless rate is 6.7 percent. A big headline, frankly, about the jobs market now is the private sector. The private sector has finally regained all the jobs lost during that horrible crash and subsequent recession. We are now back to where we started in the private sector in terms of jobs, back to those levels last seen in 2008. But that's not adjusted for new people into the labor group for population growth. We still have a lot to do.

Inside these job numbers in the job market this month, you can see professional and business services added 57,000 jobs, food and beverage also added some jobs. These are very, not as well-paid jobs as professional or business services, so that's a concern. Also construction, weather got a little better, 19,000 jobs created there. So take a look at this. Most jobs in this country pay less than $20 an hour. 81 million jobs in America pay less than $20 an hour. So how do we create better jobs and build a workforce that will lead us into the future? I sat down with Larry Summers who served at treasury secretary under President Clinton, a key member of President Obama's team during the financial crisis. I asked him if the president is doing f doing enough to create jobs.

(BEGIN VIDEOTAPE)

LARRY SUMMERS, FORMER TREASURY SECRETARY: I support what the president is doing but they are not enough. We need a major program of infrastructure investment to cross this country that will expand the economy's potential and put millions of people to work. We need a transformed education system for the 21st century that sets high standards and provides the resources necessary to meet them. We need a tax system that is genuinely progressive in which Warren Buffett no longer pays taxes at a lower rate than the person who cleans his floors. The president's doing very useful things, but we need big things if we're going to address the big challenges that we have.

ROMANS: So the number one impediment, then? If the president is doing these things around the edges that may relieve some of the pressure on workers, what's stopping us from the big things?

SUMMERS: We do not have the kind of consensus we need as a country. We have too much gridlock to move forward on things that most Americans will agree are very, very important. We have been caught for too long in a political debate that's about debt and austerity. Yes, we want to be careful about how much debts we bequeath to our children. We want to be even more careful about making sure we do not bequeath to them a decayed infrastructure.

ROMANS: The other side WILL say we've become a nation of record people on food stamps, only 63 percent labor participation rate, not enough people working. As one senator said, too many people in the wagon, not enough pulling the wagon. That is a powerful story line you're up against.

SUMMERS: It is, and the story line is right. That's why I was proud to be part of the Clinton administration when President Clinton put important work requirements into reformed welfare. This is not the time to simply cut the safety net and let people fall to the hard floor. It is the time to work harder to make the safety net a trampoline that provides people with an opportunity to go forward. That is really the -- that is really the difference in philosophies.

ROMANS: Right.

SUMMERS: There are some people who believe if you just cut that safety net somehow it will all happen. I think people will hit the ground with a hard, painful thud, and they won't bounce back. But there are plenty of ways to turn that safety net into a trampoline, and that's the right focus of policy.

(END VIDEOTAPE) ROMANS: I also asked Larry Summers how to create a job. Go to CNNMoney.com for the answer and for more of our conversation.

All right, you heard Secretary Summers argue for a longer school day right here on this show. The goal is to close the education inequality gap. Chicago's fiery mayor, Rahm Emanuel, agrees, but is he all wet when it comes to creating good jobs through education in the windy city? My candid conversation with Rahm Emanuel, next.

(COMMERCIAL BREAK)

ROMANS: Chicago Mayor Rahm Emanuel doesn't want to talk national issues, he wants to talk Chicago. Chicago. I sat down with him and Motorola executive Scott Sullivan at Motorola's shiny new space in Chicago's iconic Merchandise Building. But to get a job of the future, does Rahm Emanuel think a longer school day is the crucial place to start?

(BEGIN VIDEOTAPE)

RAHM EMANUEL, (D) CHICAGO MAYOR: What city fought for the longer day? What city not only succeeded in largest increase in school time not only during the year, but also towards, two weeks towards the end, and the reason I was nutty enough to jump in the lake is because we have this thing calmed the summer of learning and the kids in the city of Chicago get $2 million in the summer. That's why I jumped in the lake. I challenged them, and they did it.

ROMANS: Some sap the quality education is good enough to have them their longer, it's got to be enrichment, its' got to be other stuff?

EMANUEL: Through the longer day, we do not pick between math and music. Our kids get math and music. We don't pick between arts and arithmetic. Our kids get art and arithmetic. I won't put words in Scott's mouth, I'm sure what they look for is not just a person in engineering. You're looking for an employee who is well-rounded and, like all of us, the complete education you're having. And what we have to provide is the type of services, education to make sure the kids of the city of Chicago can actually come and work here, because I don't want -- let me say it this way. It's one thing to have a geographic gap. I don't want an opportunity gap.

ROMANS: We won't win, Scott, unless we have the best human capital, the best infrastructure, and the best human capital. From a business standpoint, two things you need, people and the infrastructure.

SCOTT SULLIVAN, MOTOROLA EXECUTIVE: That's exactly right. What you'll find across the country where there are hubs are technology workers, what you'll find is that there's increased focus on education in general, and specifically math, science, and engineering education early in a child's education experience so that they carry they through.

And so as the mayor and the governor create, you know, nurture and build a hub of technology companies here, and the population, you know, continues to grow, if we do get to 80,000 technology workers here, they'll have families, they'll have an interest in the education system. They'll create focus.

EMANUEL: Self-fulfillments. The other thing I would say, too, 20 percent of the entire country's protective bike lanes are in the city of Chicago. It is not an accident that the kind of new digital economy, what I call digital alley between Groupon on one end up the river and Motorola here, that you have the most protected bike lanes in the city, because employees what a multiple amount of ways to get to work.

And what we can do in the public sector, besides with the education which is project one, is build a physical infrastructure of transportation to create the quality of life.

ROMANS: What about cities versus suburbs? People moving into -- you talk in your book, you're a big American cities mayor, but for 25 years, they moved to the suburbs.

EMANUEL: And 25 years ago people wanted the space that a suburb offered and a quality of life. Today, our density, which used to be a liability for a city, is now our absolute strength. And the easy access, and I always say this, give you an example. I'm having our mass transit system, which is the second largest in the country, go 4G. Motorola and all the other companies don't want their employees to start work when they show up. They want them to start working when they're on the train. And we'll have that capacity. When they leave, they will also able to finish their work.

And also, that space, while working on the train, there's going to be a whole kind of invention and creativity that happens.

(END VIDEOTAPE)

ROMANS: Of course, just this week mayor Emanuel said his plan to fix the pension problem in Chicago, raise property taxes, cut some benefits, retirement benefits for city workers, that's going to be difficult, a big challenge for him to navigate.

Now, the focus of the mayor here on technology, technology as a part of Chicago's economic resurgence, and he really is a booster for Chicago. He says if Chicago were its own country it would be the 23rd biggest economy in the world. He jokes, it's close to becoming part of the G-20. Don't miss an all-new episode of "Chicagoland" Thursday night at 10:00, 9:00 central.

Thank you for spending your Saturday smart with us on "YOUR MONEY." Unfortunately, my Iowa State Cyclones will not be part of this year's Final Four, but stick around. Rachel Nichols has your CNN "BLEACHER REPORT," an all access look at who is taking home the top prize in college basketball. It starts right now.